You’re taking the big leap and buying a home. Congratulations! Of course, with this big investment comes a lot of questions, anxiety and excitement. However, knowing what to expect can take away some of the stress and make the entire process a lot more fun.
Where do I start???
-First decide where you want to live. Do you love the bustle of the city, prefer the burbs or want a home with land. Also think about commuting time and school districts! Once you pick a location, think about type: condo, townhouse or traditional single-family home? Finally what style do you like and if buying with someone else, do they like it too or will you need to compromise?
-Next there are two important people you want on your team, your mortgage banker and your Realtor. Since the answer to picking the right Realtor is obvious (a member of Martin Realty Group!!) we’ll move right on to your lender. Shop around for the best rates and ask your Realtor for suggestions.
-Have your lender pre-approve you for a loan. Homes go fast and if you’re not prepared with financing, you could lose the one you want.
-Your mortgage banker will tell you the amount they can lend you based on your income and credit rating. However, you need to decide if that amount is really what you can (or want) to pay for a home. In general, experts recommend you don’t pay more than a ⅓ of your monthly income on a house payment.
-While, looking at the monthly payment is the biggest factor, you also need to decide how much down payment you can afford, how high the property taxes are, how much insurance will cost and how much your closing costs will be. (Closing costs are fees paid to third parties that help facilitate the sale of the home. They vary, but plan for at least 2% of the purchase price.)
The search process.
-Once you have a pre-approval, a Realtor and an idea of what you want, the search is on for your home. Tell your Realtor your wish list, things like location, style, size, price range, if it’s open concept or has a pool. Once they know your wants, they will start looking and send you regular emails showing homes that might interest you.
-Once you see homes you like online, it’s time to see them in person. Tell your Realtor which homes you would like to visit and they will set up an appointment for a showing.
-When looking at a home, look at the overall potential. No home is perfect and there will be compromises. Finding a home is like dating. You want to find something you can live with, grow into and renovate to your taste. It can take some time to find the right one, but it’s worth it.
-Take a second look! A fresh set of eyes can make you fall in love even harder or make you realize it’s not the one. However, this is a hot market and if you want something, you have to move quickly, or you could possibly lose it.
The offer process.
-When you do find the perfect home, you’ll need to put in an offer. Your Realtor will recommend what they think is the fair market value of the home based on comparables in the area, but the final decision on the amount you want to offer is always yours.
-Once you decide what you want to offer, your Realtor will fill out a contract. Once you read over it and sign it, that contract will be sent to the homeowner's Realtor. They will then present the offer to their client. The seller can then accept the offer, suggest a counter offer or simply decline. Prepare for back and forth negotiations.
The offer was accepted, now what?
-First you’ll need to give your Realtor two checks. One for “earnest money”, another for “option money.” The earnest money is a good faith gesture to show the sellers you are serious. This tends to be 1% of the contract price, but can be more based on the home’s value. The good news is that money will go towards your home purchase when you close, so you don’t lose it. The option money is a smaller amount, around $100. It gives you time to walk away in case something is found in the inspection. If the deals closes, then this money will be credited back to you. If you do decided to walk away, the seller keeps the money.
-An inspection should also be ordered ASAP. The inspector will check out the home inside and out to see if there are any potential problems. It is their job to create a report that lists all faults. You then must decide which are no big deal and which you would like the homeowner to repair. Your Realtor and the inspector will help advise you on this, but as always the final decision is yours. Often the repairs request leads to another round of negotiations.
-Finally, your lender will order a home appraisal. A licensed appraiser will study the home to determine a value. Lenders require the home appraises for the contract price or above. If it is less, you’ll either need to renegotiate a lower price or walk away.
-We recommend you do a final walk-through of the home before closing. It allows you to verify repairs have been made and that nothing has changed in the house since the contract was signed.
-Your Realtor will work with the lender and a title company to set up a date and time for the closing paperwork. You will need to be there in person or make arrangements to pay for a mobile service. The process takes about an hour.
-It’s Closing Day!! Get ready to sign a whole lot of papers! The title company representative will have a large stack of documents and will explain each one as we go through. You will initial or sign all of them. This is also when you’ll pay closing costs. Once the closing process is complete, the bank pays the seller and you get the keys to your new home!
After you become a homeowner.
-Refer us! Real estate is our livelihood and our passion. If you think we did a good job representing you, please tell your friends.
-Keep saving! With homeownership comes major unexpected expenses, like replacing the roof. Start an emergency fund so that you won't be caught off-guard.
-Perform regular maintenance! With the large amount of money you're investing in your home, you'll want to take excellent care of it. Regular maintenance can decrease repair costs by allowing problems to be fixed when they are small.
BLOG WRITTEN BY TANYA O'NEIL
Tanya is a long-time resident of Texas who is passionate about real estate. She is a hard worker who believes integrity, fun and savvy negotiation skills are key to making her client's happy. She is also a wife and mother, so she understands the needs of a busy family. your next home! Email her at firstname.lastname@example.org